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Alibaba dives deeper into stores with a new supermarket plan

February 20, 2017 11:26 AM

(Bloomberg)—Alibaba Group Holding Ltd. is teaming up with Shanghai Bailian Group Co., one of China’s largest supermarket and department store chains, as Jack Ma accelerates an effort to employ technology to shake up old-fashioned retail.

Alibaba’s planning to help upgrade some of Bailian’s 4,700 stores across the country, integrating everything from customer relations to payment and logistics in a manner similar to its tie-ups with other players such as electronics chain Suning Commerce Group Co.

The online juggernaut that vanquished eBay Inc. and Amazon.com Inc. in China has set its sights on using its data and technology to transform the $4 trillion world of domestic bricks-and-mortar retail. In its biggest old-economy deal, Alibaba is leading a bid to buy department store chain Intime Retail Group Co. for as much as $2.6 billion. Its billionaire co-founder wants to build a network that will allow stores and brands to monitor transactions as they happen, ridding layers of distributors so that retail outlets can place orders online in real time.

“Our partnership with Bailian is an important milestone in the evolution of Chinese retail, where the distinction between physical and virtual commerce is becoming obsolete,” Daniel Zhang, Alibaba’s chief executive, said in an emailed statement.

Amazon, No. 1 in the Internet Retailer 2016 Top 500 Guide, is also keen to demonstrate how technology can transform the age-old shopping experience. It unveiled Amazon Go in December, allowing Seattle shoppers to grab groceries without waiting in checkout lines as their account is automatically charged when they exit. Like Alibaba, the U.S. e-commerce titan has extensive experience working with reams of valuable customer and supply chain data and shopping patterns.

With Bailian, Alibaba will be tapping a network of 4,700 stores across 25 Chinese provinces. Apart from Intime, the Hangzhou, China-based company has already invested in retail operators including Suning and Sanjiang Shopping Club Co. to further its so-called new retail experiment.

Alibaba won’t be taking a stake in Bailian. But the pair will integrate their membership databases and use facial recognition technology to improve shoppers’ experiences, the company said in an email. Alibaba’s online payments system, Alipay, will be available at all Bailian stores. The e-commerce giant’s delivery affiliate—Cainiao Smart Logistics Network Ltd.—will work with Bailian to flesh out protocols that make the system more efficient.